Useful Income Tax and Retirement Planning Information

There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Here is some information that you find helpful:

Income tax information (2010)

Income tax rate schedules for 2010

2010 Single Return Rate Schedule

Taxable income levels

Tax rate

0 to $8,375

10%

$8,376 to $34,000

15%

$34,401 to $82,400

25%

$82,401 to $171,850

28%

$171,581 to $373,650

33%

Over $373,650

35%

2010 Married Filing Jointly Rate Schedule

Taxable income levels

Tax rate

0 to $16,750

10%

$16,751 to $68,000

15%

$68,001 to $137,300

25%

$137,301 to $209,250

28%

$209,251 to $373,650

33%

Over $373,650

35%

2010 standard deduction

Taxation of dividends and long-term capital gains

For taxpayers in the 10% and 15% brackets, qualifying dividends and long-term capital gains (assets held for more than a year) will be taxed at 5%. For those in higher tax brackets, the special tax rate is 15%. These preferential rates were scheduled to expire at the end of 2008, but the 2006 tax law changes extended these rates through 2010.

Estate taxes

Year

Estate Size Where Taxation Starts

Top Estate Tax Rate

2009

$3,500,000

45%

2010

No estate taxation

2011

Reinstatement of old (2001) rates with estates over $675,000 being taxed

55%

Regular IRA and Roth IRA contribution limits

For tax year

IRA contribution limit

Additional contribution limits for those age 50 and over

2010

$5,000

$1,000

401(k) retirement plan contribution limits

For tax year

401(k) deferral limit

Additional contribution limits for those age 50 and over

2010

$16,500

$5,500

Education (or Coverdell) IRAs

The annual contribution limit is $2,000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $95,000 of Adjusted Gross Income (some modifications apply).

Annual gift tax exclusion

For 2010, gifts of $13,000 and under are not subject to gift tax.

Social Security

2010 Employee wages subject to Social Security tax of 6.2% - $106,8002010 Employee wages subject to Medicare tax of 1.45% - no limit2010 Self employment income subject to Social Security tax of 12.4% - $106,8002010 Self employment income subject to Medicare tax of 2.9% - no limit2010 Average monthly benefit for all retired workers - $1,1532010 Average monthly benefit for retired couples - $1,8762010 Maximum monthly benefit for a worker at full retirement age - $2,323

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The information provided should not be considered as tax or legal advice. Please consult with your tax advisor and/or attorney regarding your individual circumstances.

The information provided is not intended to be legal, tax, or financial advice. BB&T cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided to assist you in estimating the approximate costs associated with any bank activity. Your actual costs may vary. You should consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.